Sanjay Kumar, Agra V. I.T.O.-2(4), Agra

ITA 54/AGR/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6338 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N AGARWAL
• Keywords: Principle of natural justice
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH: AGRA BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, I.T.A NO . 53 / AGRA/201 5 (ASSESSMENT YEAR - 20 0 6 - 0 7 ) I.T.A NO. 54 / AGRA/201 5 (ASSESSMENT YEAR - 200 6 - 0 7 ) A SSESSEE BY SHRI P.N. AGARWAL, AR. REVENUE BY SHRI WASEEM ARSHAD, SR. DR. ORDER THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 200 6 - 0 7 , AGAINST THE ORDER DATED 11.11.2011 PASSED BY T HE LD. CIT ( A ), CONFIRMING LEVY OF PENALT Y OF RS.3,72,800/ - (WRONGLY STATED IN THE GROUNDS OF APPEAL AS RS.3,50,042/ - ) , IMPOSED ON THE ASSESSEE U/S 271(1)(C) OF THE I.T. ACT. AJAY KUMAR 72, JAIPUR HOUSE, AGRA. PAN NO. AAVPK0330Q (ASSESSEE) V S .. ITO, 2( 1 ) A GRA . (R EVENUE ) SANJAY KUMAR 72, JAIPUR HOUSE, AGRA. PAN NO. ABRPK3391G (ASSESSEE) VS.. ITO, 2( 4 ) AGRA. (REVENUE) DATE OF HEARING 21.03 .201 7 DATE OF PRONOUNCEMENT 19 . 05 .201 7 I.T.A NO. 53 & 54/ AGRA/201 5 2 ITA NO. 53 / AGRA/2015 2. AS PER THE FACTS ON RECORD, DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE INDIVIDUAL WAS HAVING ONE HALF SHARE IN A PROPERTY WHICH WAS SOLD FOR RS.44 LAC. IN THE RETURN FILED, THE ASSESSEE MADE A CLAIM OF DEDUCTION U/S 54F OF THE I.T. ACT, FOR INVESTMENT OF RS.14,10,500/ - IN PURCHASING A RESIDENTIAL PLOT WITH ANSAL HOUSING AND CONSTRUCTION LTD.. THE AO NOTICED THAT THE ASSESSEE HAD NOT PURCHASE D ANY RESIDENTIAL HOUSE, BUT HE HAD PURCHASED A PLOT WITHOUT MENTIONING NUMBER AND LOCATION, MEASURING 230.76 SQ. M., FROM ANSAL HOUSING, NEW DELHI FOR RS.12,19,186/ - AND OTHE R EXPENSES, ON STAMP AND DEVELOPMENT CHARGES, AMOUNTING TO RS.1,91,314/ - . A LONGWITH THE QUERY PUT TO THE ASSESSEE IN THIS REGARD, THE AO FURTHER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY AMOUNTS OF RS.1,76, 120/ - 10,85,150/ - AND 3,98,644/ - MAY NOT BE CHARGED, BEING LTC G EARN ED O N TRANSFER OF PROPERTY. HAVING CONSIDERED THE ASSESSEES REPLY, THE AO ADDED AN AMOUNT OF RS.15,81,903/ - TO THE TOTAL INCOME OF THE ASSESSEE AS AGAINST THE RETURNED INCOME OF RS.78,007/ - . VIDE ORDER DATED 16.07.2009, THE LD. CIT (A) ALLOWED THE ASSESSEES CLAIM OF DEDUCTION OF RS.14,10,500/ - U/S 54F OF THE ACT AND CONFIRMED THE ADDITION TO THE EXTENT OF RS.2,94,414/ - . VIDE ORDER DATED 08.04.2011, THE TRIBUNA L RESTORED THE ORDER OF THE AO SETTING ASIDE THE LD. CIT(A)S ORDER. THE A O, BY WAY OF THE ORDER DATED 13.10.2011, LEVIED THE CONCEALMENT PENALTY OF RS.3,72,800/ - ON THE ASSESSEE. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY ORDER. I.T.A NO. 53 & 54/ AGRA/201 5 3 3. BESIDES THE REGULAR GROUNDS OF APPEAL TAKEN, THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUND BEFORE THIS B ENCH : BECAUSE THE AUTHORITY BELOW HAVE ERRED BOTH ON FACTS AND IN LAW IN IMPOSING PENALTY U/S 271(1)(C) WITHOUT APPRECIATING (SIC - THAT) THE NOTICE U/S 274 READ WITH SECTION 271(1)(C) WAS BAD IN LAW AS IT DID NOT SPECIFY WHETHER THE SAME WAS FOR CONCEALMENT OF PARTICU LARS OF INCOME OR FURNISHING IN ACCURATE PARTICULARS OF INCOME. 4. THE ADDITIONAL GROUND , BEING A LEGAL GROUND, HAS BEEN ALLOWED TO BE RAISED. 5. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. IN PARA 7 OF THE ASSESSMENT ORDER, THE AO HAS OBSERVED AS FOLLOWS: IN VIEW OF THE ABOVE, IT IS CRYSTAL CLEAR THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME BY NOT DISCLOSING HIS CORRECT INCOME AND I AM SATISFY THAT THE ESCA PEMENT OF INCOME ON ACCOUNT OF CAPITAL GAIN IS RS.60,59,914/ - HAS DISCLOSED AND WORKED OUT ABOVE, IN PARA 6. THE ASSESSEE IS, THEREFORE, LIABLE FOR PENALTY U/S 271(1)(C) AS THE PROVISIONS OF PART (A) OF EXPLANATION - 1 TO SECTION 271(1)(C) OF THE ACT , 1961, WHICH CLEARLY ATTRACTED . THE PENALTY NOTICE U/S 271(1)(C) OF INCOME TAX ACT 1961, FOR CONCEALING THE PARTICULAR OF HIS INCOME IS BEING ISSUED SEPARATELY. 6. THE N OTICE U/S 274 R.W.S 271(1)(C) OF THE ACT 1961, DATED 11.11.2008 (COPY AT APB 21) READS AS FOLLOWS: WHEREAS IN THE COURSE OF PROCEEDINGS BEFORE ME FOR THE ASSESSMENT YEAR 2006 - 07, IT APPEARS TO ME THAT YOU HAVE CONCEALED THE PARTICULARS OF YOUR I.T.A NO. 53 & 54/ AGRA/201 5 4 INCOME OR FURNISHED INACCURATE PARTICULA RS OF SUCH INCOME. 7. I N PARA 7 OF THE PENALTY ORDER, IT IS STATED AS FOLLOWS: UPROKT VARNIT TATTHYON SE SPASHT HAI KI NIRDHARITI DWARA RS.16,59,914/ - KI AAY KE SAMBANDH MEIN GALAT BYOREY PRASTUT KIYE GAYE HAIN EVAM TATTHYON KO CHHIPAYA GAYA, HAI. 8. T HUS, I) EVIDENTLY, IN THE ASSESSMENT ORDER, THE SATISFACTION RECORDED BY THE AO WAS WITH REGARD TO ALLEGED CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE. II) AS PER THE NOTICE U/S 274 R.W.S 271(1)(C) OF THE ACT, THE ASSESSEE APPEARED TO HAVE CONCEAL ED THE PARTICULARS OF HIS INCOME OR HAD FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME. III) ACCORDING TO THE PENALTY ORDER, THE ASSESSEE HAD FILED WRONG FACTS AND HAD CONCEALED HIS INCOME, MEANING THEREBY, THAT THE ASSESSEE HAD FURNISHED INACCURATE PART ICULARS OF HIS INCOME AND HAD CONCEALED HIS INCOME. 9. IN P ARA 4.1 OF THE IMPUGNED ORDER, THE LD. CIT(A) HAS HELD (PAGE 9, 4 TH LINE FROM THE TOP), THAT THE PENALTY IS VERY MUCH LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 10. IN PARA 4.3 O F HIS ORDER, (PAGE 11, PARA 9 TH LINE FROM THE BOTTOM ), THE LD. CIT(A) HAS OBSERVED THAT; .IT IS QUITE CLEAR THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS AND CONCEALED ITS TRUE AND CORRECT INCOME AND, THEREFORE, HE IS VERY MUCH LIABLE FOR PENALTY U/S 271(1)(C).. I.T.A NO. 53 & 54/ AGRA/201 5 5 11. FROM THE ABOVE DOCUMENTS/ORDERS/NOTICE, IT IS AMPLY EVIDENT THAT THE DEPARTMENT ITSELF IS NOT SURE OF THE CHARGE TO BE FRAMED AGAINST THE ASSESSEE U/S 271(1)(C) OF THE ACT. IN THIS REGARD, IT IS NOW TRITE THAT THE CHARGE FOR LEVY OF CONCEALMENT PENALTY H AS TO BE SPECIFIC, IN THE ABSENCE OF WHICH, NO PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE/SUSTAINABLE. RELIANCE IN THIS REGARD HAS CORRECTLY BEEN PLACED ON BEHALF OF THE ASSESSEE, O N CIT VS. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), WH EREIN, IT HAS BEEN, INTER ALIA, HELD THAT THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY, OTHERWISE, THE PRINCIPLES OF NATURAL JUSTICE ARE OFFENDED , ELSE NO PENALTY CAN BE IMPOSED ON THE ASSESSEE. IT IS, THUS, SETTLED THAT THE CHARG E AS TO WHETHER THE ASSESSEE IS GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME, OR OF CONCEALMENT THEREOF, HAS TO BE SPECIFIC, OTHERWISE NO PENALTY IS LEVIABLE OR SUSTAINABLE U/S 271(1)(C) OF THE ACT. 12. THE CASE LAWS RELIED ON BY THE DEPARTMENT, A S RIGHTLY CONTENDED, ARE NOT APPLICABLE. IN MAK DATA P. LTD. VS. CIT , 358 ITR 593 (SC) (COPY AT DPB 8 - 17) , T HE HONBLE SUPREME COURT HELD THAT THE AO HAS TO BE SATISFIED WHETHER THE PENALTY PROCEEDINGS BE INITIATED OR NOT, DURING THE ASSESSMENT PROCEEDIN GS AND THAT THE AO IS NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER, OR TO REDUCE IT INTO WRITING. THERE IS NO DENYING THIS LAW AS LAID DOWN BY THE HONBLE SUPREME COURT. HOWEVER, WHEREAS IN THE ASSESSMENT ORDER IN THE PRESENT CASE, THE CH ARGE SPECIFIED WAS CONCEALMENT OF INCOME, T HE NOTICE U/S 274 WAS ISSUED FOR THE ASSESSEE ALLEGEDLY HAVING EITHER CONCEALED THE PARTICULARS OF HIS INCOME , OR HAVING I.T.A NO. 53 & 54/ AGRA/201 5 6 FURNISHED INACCURATE PARTICULARS THEREOF. AS PER THE PENALTY ORDER, THE ASSESSEE HA D FURNISH ED INACCURATE PARTICULARS OF INCOME AND HAD CONCEALED HIS INCOME. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND HAD CONCEALED HIS TRUE AND CORRECT INCOME. AS TO HOW MAK DATA P. LTD (SUPRA) . IS DETRIMENTA L TO THE CASE OF THE ASSESSEE I N THE PRESENCE OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) , HAS NOT BEEN MADE OUT. MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) IS DIRECTLY ON THE ISSUE THAT THE CHARGE FOR PENALTY U/S 271(1)(C) OF THE ACT HAS TO B E SPECIFIC AND NOT VAGUE. 13. GUJARAT STATE FINANCIAL SERVICES AHMEDABAD VS. ACIT (COPY AT DPB 19 - 49) HAS BEEN RENDERED BY THE TRIBUNAL, WHEREAS MANJUNATHA COTTON AND GINNING FACTORY (SUPRA) HAS BEEN HANDED DOWN BY THE HONBLE KARNATAKA HIGH COURT, TH E FINDINGS WHEREIN ARE DIRECTLY ON THE ISSUE OF THE CHARGE BEING SPECIFIC. PERTINENTLY, AS NOTED HEREINABOVE, AND AS EVIDENT FROM THE RECORD , ALSO NOT DISPUTED BY THE DEPARTMENT, THE DEPARTMENT HAS BEEN TAKING SH I FTI NG STANDS IN THE PRESENT CASE WITH REGARD TO THE CHARGE AGAINST THE ASSESSEE. 14. IN K.P. MAD H USUDAN AN VS. CIT , 251 ITR 99 (SC) (COPY AT DPB 50 - 53), IT WAS OBSERVED THAT WHEN THE AO ISSUES TO AN ASSESSEE A NOTICE U/S 271(1)(C), HE MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THEREOF ARE T O BE USED AGAINST HIM. IN THE PRESENT CASE, HOWEVER, AS SEEN ABOVE, THE STAND OF THE DEPARTMENT IS NOT CONSISTENT , THEREBY NOT MAKING THE ASSESSEE AWARE OF THE EXACT CHARGE AGAINST HIM. MOREOVER, THE RATIO OF MANJUNATHA COTTON AND GINNING FACTORY (SUPRA ) HAS I.T.A NO. 53 & 54/ AGRA/201 5 7 BEEN CONFIRMED BY THE HONBLE SUPREME COURT IN CIT VS. SSAS EMERALD MEADOWS, 73 TAXMAN.COM 248 (SC). 15. CIT VS. ZOOM COMMUNICATION PVT. LTD. , RENDERED BY THE HONBLE DELHI HIGH COURT IN ITA NO. 7/2010, VIDE ORDER DATED 24.05.2010 (DPB 54 - 60) I S ALSO NOT DETRIMENTAL TO THE CASE OF THE ASSESSEE. IN THAT CASE, IT WAS HELD THAT IF THE ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW , BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FO UND TO BE BONA FIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY CONFIRMED U/S 271(1)(C) OF THE ACT. HOWEVER, IT HAS NOT BEEN DISPUTED IN THE PRESENT CASE THAT THE CLAIM MADE FOR ELIGIBLE DEDUCTION UNDER SECTIONS 54F AND 54EC OF THE ACT WAS BONA FIDE. ACTUALLY , INVESTMENT S WERE MADE IN THE PURCHASE OF THE RESIDENTIAL PLOT AND ELIGIBLE CAPITAL GAIN BONDS. THE INVESTMENT S MADE WERE DULY DISCLOSED IN THE RETURN OF INCOME FILED. 16. FURTHER, MAK DATA (SUPRA) HAS BEEN CONSIDERED BY THE KOLKATA BENCH OF THE TRIBUNAL IN SUVAPRASANNA BHATACHARYA VS. ACIT , (APB 87 - 106) AND THE MATTER HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING MANJUNATHA COTTON AND GINNING FACTORY (SUPRA). 17. THEN, MAK D ATA (SUPRA) AND CIT VS. S.V. ANGIDI CHETTIAR, 44 ITR 739 (SC) (ALSO RELIED ON BY THE DEPARTMENT) HA VE BEEN CONSIDERED BY THE VIZAG . ITAT IN ITO VS. SMT. MAKINA ANNA PURNA , (APB 107 - 128) AND FOLLOWING, INTERALIA, MANJUNATHA COTTON AND GINNING FACTORY (SUPRA), THE MATTER HAS BEEN I.T.A NO. 53 & 54/ AGRA/201 5 8 DECIDED IN FAVOUR OF THE ASSESSEE. SSAS EMERALD MEADOWS (SUPRA) HAS ALSO BEEN TAKEN INTO CONSIDERATION. 18 . IN VIEW OF THE ABOVE, FINDING FORCE IN THE GRIEVANCE RECEIVED BY THE ASSESSEE BY WAY OF THE ADDITIONAL GROUND OF APPEAL , IT IS ACCEPTED. THE ORDER UNDER APPEAL IS REVERSED AND THE PENALTY IMPOSED ON THE ASSESSEE IS CANCELLED. ITA NO. 54/AGRA/2015 19. THE FACTS IN THIS APPEAL ARE, MUTATIS MUTANDIS, EXACTLY SIMILAR TO THOSE IN ITA NO.53 AND MY ABOVE OBSERVATION S IN ITA NO. 53 ARE DIRECTLY SQUARELY APPLICABLE TO THE PRESENT APPEAL ALSO. IN ACCORDANCE THERE WITH THE PENALTY IN ITA NO. 54 IS ALSO CANCELLED. 20. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 19 / 0 5 / 2017 . SD/ - (A.D. JAIN) JUDICIAL MEMBER DATED 19 / 0 5 /201 7 *AKV* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR